To not want to pay off my mortgage?

[IProbablyAm2024]

My DH and I are very fortunate to potentially have a nest egg of about £50K. MIL has also offered to pay off the remaining £50K if we put it in our mortgage so we are "debt-free".

I am struggling with this for a few reasons:

• mortgage is manageable and not a problem (although has increased)
• our house is old so don't really want to "invest" in it - we might move
• money is then trapped in the mortgage and unavailable
• I think a lump sum/nest egg would be more use for large purchases and rainy day problems
• it reassures me to know this nest egg is available for emergency medical or other expenses
• I feel exposed knowing it's all in the mortgage
• we'll be better off each month but only by the amount of the mortgage payment
• what if we fritter it away each month?
• I feel bad having my MIL pay off my mortgage- a failure as an adult and a parent (backstory alert)

Husband is on board with the plan and is excited to save £30k of mortgage interest over the life of the mortgage. I think you don't save what you might never pay.

Should we do it?

If my mil was pound matching the overpayments on the mortgage I'd throw the lot in and it won't take long to accumulate another nest egg with the money you won't be paying on the mortgage each month.

She’s offering to pay off your mortgage and you’d rather keep it? That makes literally no sense.

Thank you, that's very plainly set out and helpful.

It's fair to say that I'm financially risk averse for family reasons but your explanation has clarified some things.

Secondly, return. If the return on savings/investments exceed the APR on the mortgage, you'll be better off.

For this, in particular, I suppose it will be interesting to see how this plays out after the budget.

It looks like a nice gift, so hopefully not a trojan horse!
If there was a hint it could be the latter, I wouldn't need £50k enough to accept it I'm afraid.

I’d be really frustrated with MIL trying to dictate our financial decisions by dangling money in front of us. I’d possibly say no thanks on principle. A gift with strings etc…

Without knowing the nuances of your financial situation and goals it’s impossible to say if this is a good idea. Using all your savings to pay off your mortgage and having no buffer is certainly daft. And even making an overpayment would depend on what your mortgage rate was, if there’s a repayment charge, and what rate you’re getting on your savings.

Well it doesn't make financial sense if you're getting markedly more return on the money than the mortgage interest is costing you.

I'm not sure why anyone would advise you that way, based on returns.

Look into Yorkshire Building Society offset mortgage. You put your £50k into a savings account and your Mil can put hers into family offset account . That way the mortgage payments are zero but you both have immediate access to your £50k if you wanted to.

But you’re not forced to accept a gift if you don’t want it.

There are two separate issues, tied together here OP.

Firstly need to look at whether paying off your mortgage does make good financial sense - would using the 50k leave you with no savings buffer? That would probably be a no from me. I have an offset mortgage and have 100% of balance in savings, I still can't quite commit myself to actually pay off the mortgage 'just in case'.

If you still have other savings you need to work out how quickly you can replace your savings using your mortgage payment amount that will become spare cash. (personally I would redirect this all into savings for the short/mid term rather than feeling more cash rich)

I didn't understand the bit where you can't save what you may never pay - at some point this mortgage will need to be paid off, even if you move so long term you would be saving that 30k somewhere along the line.

The other issue is the strings that will be attached - once you have worked out whether you will be better off financially you need to work out whether the strings are worth it. Ignore the posters with faux horror of refusing this gift, only you know what you will need to do to 'repay' PIL's genorisity.

I have a friend that turned down the funds to buy a 4 bed house from in-laws, as she knew they would want too much input into which house they bought, what they did when they got it etc - she said she would rather stay in her perfectly fine mortgaged 3 bed and avoid the aggrevation.

If you may well be a millionaire and have just bought houses and cars with cash, then £50K to control your son is probably peanuts!

It's a lot to us but it's pocket money to her.

We've actually wondered if she feels guilty because she's been totally obsessed with her own expensive affairs lately and hasn't been interested in us at all.

No worries.

Paradoxically, it is often the most risk averse people that take some of the largest risk by tying up money in a property and leaving themselves vulnerable to unexpected short term expenses. People understand 'risk' in financial terms as maybe the volatility of a particular investment. That's not wrong, its part of it, but its broader than this.

Yes, the budget is a concern. We're getting a lot of phone calls. All we can do is wait and see. Its the uncertainty that is causing the most anxiety.

Yep. I mentioned offset mortgage earlier in the thread but no one picked up on it.

We have one with Coventry BS.

We have around £150k mortgage remaining with the full amount offset by savings.

Our other investments are less liquid - but bring much higher returns - and we like to have the £150k available if ever needed.

To be honest, £100k would be more than enough for a rainy day, so we probably should take some of the offset savings and invest that too, which at current ROI on our other investments would still earn double what it's saving us in mortgage interest!

It isn't a binary choice, you can easily keep back £10k for emergencies. For £100k mortgage you are paying around £500/month? You could then be mortgage free in just over a year while retaining a nest egg for all emergencies.

Solicitors can draw up a letter for you to confirm that any MIL money is a gift free and clear of obligations. it is up to your DH to control situations if she is asking for more time than you are comfortable giving; while you want less contact it seems very unlikely thay he will be more or less inclined to see his own mum if she gives him some money. Could you articulate better why you think the money would affect what your DH does please?

People often think investments will deliver more than they do, a financial crisis arises and it's all "woe is me" that the 10% turned out to be high risk and their savings have been halved instead. I would suggest that you set up the emergency fund, pay off the mortgage, set up regular pension top-ups, and only then gamble with money you can afford to lose.

That's because all financial advisors are obsessed with pensions and nothing else.

I will give you a gift if you do what I tell you to with money that is yours - its extremely controlling and is not a straightforward gift - added to that there will be other consequences for accepting the gift, that really isn't how life should be.

A no thank you on repeat is needed.

If dh wants to accept money then it can't be on the terms that you have to do xy and z with money that is yours

I certainly wouldn't sell my soul for £50k.
It seems your MIL knows too much already about your finances. She knows you have £50k in savings and £100k left on your mortgage.
You may love your husband but are you his priority? Why does his mother seem to know so much about your (his and yours) financial affairs? You need to have a serious chat with him about what information he is giving his parents. Maybe time to have new boundaries established when it comes to them. From what you've said you seem to be in a position where you are constantly having to push back. Enough is enough!

our house is old so don't really want to "invest" in it

This bit really stood out to me because you've already paid off most of your mortgage and your house will be worth significantly more than what you paid for it originally.

Your house is already an investment and you should look after it. It will be much more expensive to keep on top of modernisations and repairs if you aren't doing it on an ongoing basis (replacing a boiler now will be cheaper than replacing it in 5 or 10 years for example), and you can easily end up with 100k or so more off the selling price when you do sell because you haven't kept on top of things.

That's because all financial advisors are obsessed with pensions and nothing else

a FA isn't going to make any money from you paying off your mortgage, they will from selling you a pension or other goods

That's really not true at all.

This is not much to do with the pros and cons of paying off the mortgage. It's all about accepting a £50k gift from a manipulative person.

The strings seem really weird to me. Why would she be prepared to give you £50k now if you put your savings in too, but not to bring down your balance and reduce your monthly outgoings and/or shorten your mortgage term considerably? Maybe your husband could ask if she'd do the latter instead (so you can keep a buffer for emergencies, uni fund etc) and see what she says.

I totally get why you might prefer to just not go there at all, but it's not an argument you will win on financial arguments alone. £50k plus the saved interest is a lot.

Tell mil you will invest her 50k with your 50k see if the interest earned is more than the interest on the mortgage

So you have the option of 50k to pay off mortgage or no gift of money? I would take the 50k to pay off the mortgage.

You can always set up a direct debit into a high interest savings account.

There are two completely separate questions here. One is whether OP should take MIL's money, which has to be up to her given all the strings, and the other is what might be the most sensible thing to do with the first £50k, where we might be able to provide some insight from our own financial experience.

I think the second question depends on things like how long the mortgage has left to run, what the interest rate is, etc. If it's fixed at 1.5% for a long period then the £50k would probably be better invested in something else. You can get structured investments that will give you 99% certainty of 2% return, or 90% certainty of 3%, etc etc. But if OP is currently paying 4–5% it would tip the scales in favour of paying off a chunk of the mortgage. Equity is also rainy-day money, whether you realise it via release or simply have lower monthly payments which will help if you have to reduce your work hours.

I'm with you OP. A gift with strings attached, that you don't really need, isn't really a gift.

I would not be blackmailed by MIL that cost is quite high. I wonder though if there is an option to move your mortgage to an offset with your bank? I had such an account for years and in reality the money rests in the mortgage and can be drawn down at anytime literally by clicking a few buttons. Might be worth considering?